As part of through due diligence, SharesVault also do valuation of the company which helps SharesVault to derive current fair market price of the company.

Valuation is a vast subject and also subject of perspective and personal opinion. Like if a mobile is of X value for person A but same can be of 2X for person B. Valuation is the process of estimating what something is worth.

There are many techniques available for company valuation. Here 3 techniques are described briefly:

1. Discounted Cash Flow
Via this method valuing a company using the concepts of the time value of money. All future cash flows are estimated and discounted to give their present values (PVs) — the sum of all future cash flows, both incoming and outgoing, is the net present value (NPV). Discounted cash flow tries to work out the value of a company today, based on projections of how much money it’s going to make in the future.The discounted cash flow analysis quantifies what money to be received in the future is worth today assuming a certain discount rate.
For more information : http://tommydog.hubpages.com/hub/Understanding-Discounted-Cash-Flow

2. Book Value
Value of total asset minus value of total liabilities. It is the total value of the company’s assets that shareholders would theoretically receive if a company were liquidated. In practice, book value is seldom used in the process of securing venture capital, although it is widely believed to be a realistic approach to measuring a small company’s net worth.

3. P/E Multiple:
P/E – Price Earning ratio
a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The financial reporting of both companies and investment research services use a basic earnings per share (EPS) figure divided into the current stock price to calculate the P/E multiple.
EPS – The portion of a company’s profit allocated to each outstanding share of common stock.
EPS = Net Profit / No. of outstanding share
so P/E ratio = Stock Price / EPS
The ratio will also vary widely among different companies and industries.
Once we derive P/E ratio, similar industries listed peer companies will be searched and relative valuation will be worked out.

At SharesVault once investor has stocks, he/she can sell it through multiple options. Investor can be one who has purchased Shares from company, other investor or employee with ESOPs.

Multiple options are :
1. Fixed Price
2. Negotiation
3. Auction

Based on investor choice, investor can post sell request for his/her Shares.1. Fixed Price:
In this method Investor keeps fixed price and buyer who will agree to the price will accept it and shares will be sold to that particular buyer.

Ex. Mr. Sharma has 10000 shares of ABC Pvt Ltd and he wants to sell on Rs.55 than he will post it and the one who agrees to buy will accept it.

2. Negotiation:
In this method Investor will post sell price but ready to negotiate if any buyer is interested in buying the share.

Ex. Mr. Sharma has 10000 shares of ABC Pvt. Ltd and he posted to sell on Rs.55. One buyer is interested to buy the shares at Rs.54 and if both agree on prices than transaction process will be initiated.

3. Auction:
In this method Investor will post floor price which is minimum he/she expects and keep the bid open for certain time. Interested buyer will post. Buyer can see bid history and even the current highest price.

Ex. Mr. Sharma has 10000 shares of ABC Pvt. Ltd and he posted to sell with floor price of Rs.54. Buyers started bidding with prices like 54.20, 55, 54.50, 55.20. At the end of auction transaction will be initiated between highest bid buyer and investor.

These many options will help investor to create interest in company’s shares and also will keep investor on SharesVault interested to buy/sell more and this will bring liquidity in Pvt. Ltd. Company shares.